A former US Treasury Secretary has criticised the idea of creating a national crypto reserve. Why?
The US authorities should organise the process of forming a new national reserve, which will include Bitcoin. This is exactly what one of Donald Trump’s election campaign promises was. Of course, cryptocurrency fans loved the idea, with it also leading to market growth after the politician’s election victory a month ago. However, the initiative also has its haters – former US Treasury Secretary Lawrence Summers is among them.
Where will be the national reserve of cryptocurrencies
Summers considers the idea to create a national reserve of bitcoins Trump “crazy”, although he is not an open opponent of digital assets. At the same time, he believes that some other initiatives of the president-elect in November can have a favourable impact on the US economy.
In his recent interview with Bloomberg TV, Summers made the following statement about what’s going on.
The idea that we should have some kind of national bitcoin reserve is just crazy. I understand why we need a national oil reserve. I understand why we were hoarding gold at Fort Knox a hundred years ago. Of all the prices to support, why did the government choose to support Bitcoin?
As cryptocurrency enthusiasts have pointed out, in this rejoinder, the former minister clearly showed why he doesn’t really understand the reason for states to hoard gold. Still otherwise he wouldn’t have had any questions about Bitcoin.
BTC is often referred to as the digital analogue of gold, with US Federal Reserve Chairman Jerome Powell among others making this point this week.
Bitcoin has a limited maximum supply, falling inflation rates and a transparent blockchain at its core, making it easy to check the cryptocurrency’s current supply in circulation. On top of that, it is being actively bought up by large companies along the lines of MicroStrategy, and the asset itself is a good inflation defence in retrospect. All of this makes BTC practically the same as precious metal.
Former U.S. Treasury Secretary Lawrence Summers
The ex-minister believes that the interests of people who supported Trump in the election are to blame. He continues.
There is no reason to do this other than to pander to generous donors of campaign funds.
During his campaign, Trump floated the idea that the US government should keep the bitcoins he confiscated – some 198,000 BTC worth more than $19 billion.
Some Trump-supporting Republicans, notably Wyoming Senator Cynthia Lummis, have previously introduced a bill that would see the government buy 1 million BTC. In total, we are talking about approximately 5 per cent of the total number of coins in circulation.
Cryptocurrencies on U.S. President-elect Donald Trump’s Etherium wallet
That said, Summers noted that some of Trump’s remarks about cryptocurrencies are quite valid.
I think we should support financial innovation wherever it comes. There are probably aspects where cryptocurrencies have been overly stifled by regulators.
According to Cointelegraph’s daan sources, Summers served as Treasury Secretary from 1999 to 2001 during the Clinton administration and was an advisor to the Digital Currency Group (DCG) in 2016.
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You’re going to have to apologise for your longtime hatin’ on crypto eventually – that’s exactly what journalists from the Financial Times’ FT Alphaville news outlet did, although they did so in a slightly bizarre manner.
Bitcoin crossed the $100,000 per coin mark this week, and the portal’s management deemed the event worthy of an apology. They were voiced by Bryce Elder, editor of the FT.
We are sorry if at some point in the last fourteen years you decided not to buy an asset whose price has risen on the basis of our coverage. It’s nice to see an investment grow in value. We’re sorry if you misread our cryptocurrency cynicism as a statement of support for the field of traditional finance, because we hate that too.
An apology from the FT
For years, FT Alphaville experts have persistently claimed that Bitcoin is a “negative sum game”. They have also claimed that the cryptocurrency is supposedly “chronically inefficient” as a medium of exchange and “compromised” as a store of value.
On top of that, the journalists called Bitcoin’s price “an indicator of hype that has nothing to do with utility.” However, even the apology generated more negative emotions from the community.
Here, for example, is a tweet by the user ran_the_numbers as a reaction.
This is perhaps the most passive-aggressive and cynical apology in my memory. It is even more satisfying than a sincere apology, though.
The lapses in judgement of Bitcoin’s critics are confirmed by the facts: after a local correction the day before, the BTC exchange rate has again approached the $100,000 mark. Judging by many forecasts, Bitcoin price will not stay here for long, that is, the crypto will continue to move to new historical highs.
At the same time, the general perception of cryptocurrency critics is gradually changing. For example, the day before, CNBC hosts gently mocked a representative of a company from traditional finance who openly ignored Bitcoin. One of them focused on the fact that the financiers missed the opportunity to make a 40 per cent profit on BTC in the past few weeks.
It seems that the former US Treasury Secretary didn't have time to understand the benefits of cryptocurrencies. Still, if a person supports investing in gold but opposes Bitcoin, then his knowledge of digital assets has not had time to become extensive. And with this in mind, it is hardly worth listening to an expert, because his recommendations will lead to a loss of profit.
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